Small companies should embrace the strategies adopted by Tesla Motors Inc (NASDAQ:TSLA) and SolarCity Corp (NASDAQ:SCTY) to derive commercialization and scaling benefits.
Founder of Broadscale Group Andrew Shapiro highlighted in a presentation yesterday at the Renewable Energy Finance Forum (REEF)-Wall Street how small clean energy companies can succeed through gainful collaboration with large corporations.
Michael Mauboussin: Here’s what active managers can do
The debate over active versus passive management continues as trends show the ongoing shift from active into passive funds. Q2 2020 hedge fund letters, conferences and more At the Morningstar Investment Conference, Michael Mauboussin of Counterpoint Global argued that the rise of index funds has made it more difficult to be an active manager. Drawing Read More
REEF-Wall Street is a premier renewable energy financing event in the U.S. The event throws light on the rapidly changing state of renewable energy finance, and gives insights about the path ahead.
Small Companies Should Forge Collaborative Partnerships
Andrew Shapiro suggested smaller companies should look to forge collaborative partnerships with big corporations, where interests are aligned with a corporate investment. Such a partnership should help leverage the reach and scale of smaller companies to rapidly achieve scale, which they would struggle to find on their own.
Tom Konard, in a report filed for Forbes, observes Shapiro could see a new stage in the approach of large corporations towards the clean energy space. According to Shapiro, large corporations are presently looking for new business models of open collaboration, not only in the clean energy space, but across a broader spectrum.
Small and innovative companies can align with large corporations to derive the benefits of commercialization and scaling. According to Shapiro, scaling is the key to mainstream success.
Tesla and SolarCity are Best Examples
Shapiro cited Tesla Motors Inc (NASDAQ:TSLA) and SolarCity Corp (NASDAQ:SCTY) as two examples where collaboration with large, established companies proved to be highly successful for both Tesla and SolarCity.
Tesla Motors Inc (NASDAQ:TSLA) CEO and Chairman and SolarCity Corp (NASDAQ:SCTY) Chairman Elon Musk has successfully implemented collaboration strategies by having partnerships with major corporations. This acted as a win-win situation, as large corporations were conversely able to tap into the small companies’ innovative talents.
Elon Musk brought in Daimler AG (OTCMKTS:DDAIF) (ETR:DAI) (FRA:DAI) with a 10 percent stake, and convinced Toyota Motor Corporation (TYO:7203) and Panasonic Corporation (TYO:6752) to invest $50 million and $30 million respectively. These are self-interested investments, as Motor Corporation (TYO:7203) has collaborated with Tesla Motors Inc (NASDAQ:TSLA) to derive the benefit of its new Electric RAV-4 technology.
Panasonic Corporation (TYO:6752) collaborated with Tesla Motors Inc (NASDAQ:TSLA) on new battery technology. By the end of this month, Panasonic Corporation (TYO:6752) is expected to ship 100,000 automotive grade lithium-ion battery cells to Tesla Motors Inc (NASDAQ:TSLA).
As regards SolarCity Corp (NASDAQ:SCTY)’s collaboration, its partnerships with Google Inc (NASDAQ:GOOG) and Goldman Sachs Group Inc (NYSE:GS) are highly popular. However, Shapiro feels the most innovative partnership for SolarCity is its collaboration with Honda Motor Co Ltd (TYO:7267), where Honda is lending SolarCity. some of its marketing muscle. Honda (TYO:7267) is seeking cost savings and green credentials by installing SolarCity systems on its dealerships.
Tom Konard concludes that any investor looking for the next Tesla Motors Inc (NASDAQ:TSLA) or SolarCity Corp NASDAQ:SCTY) should watch out for companies that partner with established corporates to derive benefits from clean energy.